Does Corporate Misconduct Affect the Future Compensation of Alumni Managers?

Boris  Groysberg; Eric  Lin; George  Serafeim

Article | Advances in Strategic Management | July 2020

Does Corporate Misconduct Affect the Future Compensation of Alumni Managers?

by Boris Groysberg, Eric Lin and George Serafeim

Abstract

Using data from a top-five global executive placement firm, the authors explore how an organization's financial misconduct may affect pay for former employees not implicated in wrongdoing. Drawing on stigma theory, they hypothesize that although such alumni did not participate in the financial misconduct and they had left the organization years before the misconduct, these alumni experience a compensation penalty. The stigma effect increases in relation to the job function proximity to the misconduct, recency of the misconduct, and an employee's seniority. Collectively, results suggest that the stigma of financial misconduct could reach alumni employees and need not be confined to executives and directors that oversaw the organization during the misconduct.

Keywords: corporate misconduct; Financial Misconduct; stigma; Crime and Corruption; Employees; Compensation and Benefits;

Format: Print

Citation:

Groysberg, Boris, Eric Lin, and George Serafeim. "Does Corporate Misconduct Affect the Future Compensation of Alumni Managers?" Special Issue on Employee Inter- and Intra-Firm Mobility. Advances in Strategic Management 41 (July 2020).

The case revolves around the actions that Barbara Novick, co-founder and Vice-Chair of Blackrock, and Michelle Edkins, Global Head of Investment Stewardship, would need to take in response to the controversial CEO letters from Laurence (Larry) Fink, Chairman and CEO of BlackRock. Fink’s letters focused on the importance of corporate purpose and investing considering environmental, social, and governance (ESG) issues. The case also discusses Blackrock’s plans for a new model of shareholder engagement to help drive the changes proposed in the letters. The case presents the opportunity to discuss the governance role played by major institutional investors as well as how the responsibilities and actions of one large investor, BlackRock, should evolve in this role going forward. It is not clear whether BlackRock should play such a role and, if so, whether they have the ability to enforce corporate compliance and to carry out this role given they are primarily an index investor. The case is likely to generate spirited debate about the merits of BlackRock’s pronouncements and the importance of corporate investments in ESG themes and allow for discussions on measurement and disclosure strategies that can judge progress on these dimensions.

Case | HBS Case Collection | July 2020

The Honor Foundation: Accessing Special Operations Talent

Boris Groysberg and John Masko

In 2020, The Honor Foundation (THF), a nonprofit dedicated to helping U.S. military special operators to transition into civilian careers, was facing a series of strategic challenges. THF had been founded in 2013 by former Navy SEAL trainee Joe Musselman, who observed a disturbing pattern: once special operators left the military in their mid-30s or 40s, they tended to end up in jobs in which they were overqualified, underpaid, and unfulfilled. Musselman attributed this to fundamental disconnects between the world of special operations, whose members had unique and deep skill sets but little experience articulating them in the civilian world, and the world of business. THF’s programs gave transitioning special operators space to reflect on what they wanted out of their transition, and hard skills for interviewing, resume writing, and networking. Over seven years, its three month program had grown to serve over 200 transitioners per year on three campuses plus a virtual campus. But in early 2020, THF was not yet serving America’s largest contingent of special operators: the U.S. Army Special Forces. As the COVID-19 pandemic raged, THF CEO Matt Stevens was evaluating how best to incorporate Army special operators and fulfill THF’s mission of serving all the U.S. special ops community. Should THF build another physical campus? Should it use its virtual campus to incorporate Army special operators instead? Or should it take on government funding to scale quickly? Students who read this case will evaluate this strategic problem while becoming familiar with the unique skills of the Special Operations Forces community.

Keywords: Experience and Expertise; Talent and Talent Management; Curriculum and Courses; Executive Education; Social Entrepreneurship; National Security; Recruitment; Retention; Job Interviews; Job Search; Knowledge Use and Leverage; Leadership Development; Leadership Style; Crisis Management; Mission and Purpose; Retirement; Nonprofit Organizations; War; Education Industry; San Diego; Virginia;

Citation:

Groysberg, Boris, and John Masko. "The Honor Foundation: Accessing Special Operations Talent." Harvard Business School Case 421-006, July 2020. View Details

Cite View Details Educators

Faculty & Research

Does Corporate Misconduct Affect the Future Compensation of Alumni Managers?

Abstract

Citation:

About the Authors

More from these Authors